This interim report is printed on environmentally friendly paper.

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2 This interim report is printed on environmentally friendly paper.

3 CONTENTS 2 Corporate and Investor Information 4 Management Statement 16 Report on Review of Condensed Consolidated Financial Statements 18 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 20 Condensed Consolidated Statement of Financial Position 22 Condensed Consolidated Statement of Changes in Equity 23 Condensed Consolidated Statement of Cash Flows 24 Notes to the Condensed Consolidated Financial Statements

4 2 CORPORATE AND INVESTOR INFORMATION DIRECTORS Executive Directors TAN Harry Chua, Chairman CHAN Wing Kit, Frank, Chief Executive Officer TAN Lucio Jr. Khao TAN Michael Gonzales PASCUAL Ramon Sy CHUA Joseph Tan CHIU Siu Hung, Allan Independent Non-executive Directors CHONG Kim Chan, Kenneth SY Robin Chua FOK Kam Chu, John GO Patrick Lim TAN Kenway Hao REMUNERATION COMMITTEE CHONG Kim Chan, Kenneth, Chairman TAN Harry Chua CHAN Wing Kit, Frank SY Robin Chua FOK Kam Chu, John COMPANY SECRETARY WONG Oi Yee, Polly AUDIT COMMITTEE CHONG Kim Chan, Kenneth, Chairman SY Robin Chua FOK Kam Chu, John GO Patrick Lim NOMINATION COMMITTEE TAN Harry Chua, Chairman CHAN Wing Kit, Frank CHONG Kim Chan, Kenneth SY Robin Chua FOK Kam Chu, John AUDITORS Deloitte Touche Tohmatsu LEGAL ADVISERS Deacons Mayer Brown JSM Appleby Longan Law Firm Shanghai Kai-Rong Law Firm PRINCIPAL BANKERS Hang Seng Bank Limited Industrial and Commercial Bank of China Limited China Merchants Bank Co., Ltd. Bank of China Limited Bank of Communications Co., Ltd.

5 3 Corporate and Investor Information (Continued) STOCK CODE 29 SHARE REGISTRAR Principal Share Registrar MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda Branch Share Registrar Tricor Tengis Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong WEBSITES REGISTERED OFFICE Canon s Court 22 Victoria Street Hamilton HM 12 Bermuda PRINCIPAL PLACE OF BUSINESS 17th Floor, Eton Tower 8 Hysan Avenue Causeway Bay Hong Kong REPRESENTATIVE OFFICE IN SHENZHEN Unit 1321, Shenzhen Kerry Centre 2008 Renminnan Road, Shenzhen The People s Republic of China FINANCIAL CALENDAR Last Registration Date for Interim Dividend 9 April 2018 Book-close Dates 10 April April 2018 (both days inclusive) Record Date for Interim Dividend 13 April 2018 Payment of Interim Dividend 27 April 2018

6 4 MANAGEMENT STATEMENT The board (the Board ) of directors (the Directors ) of Dynamic Holdings Limited (the Company ) hereby present its management statement including, among others, discussion and analysis of the performance and the unaudited condensed consolidated financial statements of the Company and its subsidiaries (the Group ) for the six months ended 31 December 2017, which have been reviewed by external auditor of the Company, Deloitte Touche Tohmatsu. INTERIM RESULTS For the six months ended 31 December 2017, the Group reported a total revenue of HK$54,536,000 (2016: HK$51,121,000) and gross profit of HK$42,347,000 (2016: HK$40,369,000), showing mild increase of 7% and 5% respectively compared with those of the previous corresponding period. These results were attributable to the stable rental income of investment properties of the Group denominated in renminbi yuan ( RMB ), with gross profit margin at 78% (2016: 79%). During the period under review, the Group accounted for other income of HK$14,583,000 (2016: HK$2,898,000), mainly attributable to imputed interest income of HK$6,711,000 (2016: HK$6,895,000) and the net exchange gain of HK$5,029,000 (2016: net exchange loss of HK$6,409,000) due to the RMB appreciation against Hong Kong dollar ( HK$ ). In addition, the Group recognised an aggregate increase of HK$47,408,000 (2016: HK$42,974,000) in the fair value of the investment properties. After taking into account of the effect of reduced taxation and currency translation to presentation currency in HK$ from functional currency in RMB, which appreciated 2.8% against HK$ (2016: devalued 6.5%) in the period, the profit for the period attributable to shareholders of the Company was HK$78,876,000 (2016: HK$58,003,000), which increased by 36% from that of the last corresponding period, with basic earnings per share of HK$ (2016: HK$0.2580). Meanwhile, the other comprehensive income was HK$78,876,000 (2016: other comprehensive expense of HK$88,542,000) due to the above-mentioned exchange difference on translation, and the total comprehensive income attributable to shareholders of the Company amounted to HK$156,376,000 (2016: total comprehensive expense of HK$28,986,000).

7 5 Management Statement (Continued) INTERIM DIVIDEND The Directors have declared an interim dividend of 2.5 Hong Kong cents (2016: 2.5 Hong Kong cents) per share for the six months ended 31 December 2017 to the shareholders of the Company whose names appear on the register of members on Friday, 13 April The warrants for the interim dividend are expected to be despatched to those entitled on or about Friday, 27 April BUSINESS REVIEW In the period under review, the overall revenue and results of the Group were principally derived from its operating segment in terms of property rental in the mainland China denominated in RMB, which performed steadily as compared with those of the last corresponding period. The rental income of the Group generated from its investment properties in two major cities, Shanghai and Beijing, amounted to RMB46,244,000 (2016: RMB44,609,000), showing a slight increase of 4% as compared with that of last corresponding period. Such rental income presented in the financial statements in the sum of HK$54,536,000 (2016: HK$51,121,000), which represented all (2016: all) of the consolidated revenue income of the Group in the period. And the fair value of these investment properties of the Group comprising shopping mall and carparks in Beijing and office units in Shanghai appreciated in the sum of RMB40,200,000 (2016: RMB37,500,000), translating into HK$47,408,000 (2016: HK$42,974,000) in the period. As such, the segment results of property rental reported a profit of RMB75,750,000 (2016: RMB71,989,000), presenting in HK$89,332,000 (2016: HK$82,498,000) which shows an increase of 8% as compared with the last corresponding figure. In Beijing, the rental income generated from the well-established community mall (including car parks) of the Group in Chaoyang District improved with an average occupancy rate over 95% (2016: over 95%) throughout the period. In addition, the rental income of this segment in the period totalled RMB15,214,000 (2016: RMB15,215,000) translating into HK$17,941,000 (2016: HK$17,436,000) which accounted for 33% (2016: 34%) of the total revenue of the Group. The fair value of these investment properties appreciated in the sum of RMB14,200,000 (2016: RMB1,500,000), translating into HK$16,746,000 (2016: HK$1,719,000). Thereby, a profit of HK$27,119,000 (2016: HK$12,680,000) was recorded in this segment results in the period, denoting a substantial rise of 114% as compared with that of the last corresponding period. Due to limited residential units held for sale by the Group in Beijing, there was nil (2016: nil) proceeds of property sales of the Group making an administrative loss of HK$95,000 (2016: HK$99,000) in this segment results of property sales in the period.

8 6 Management Statement (Continued) BUSINESS REVIEW (Continued) In Shanghai, the quality offices of the Group known as Eton Place which is in the prominent financial location of Little Lujiazui in Pudong attained an average occupancy rate of over 95% (2016: full) with moderate increase in rental rate during the period. And the rental income was in the sum of RMB31,031,000 (2016: RMB29,394,000), showing a mild increase of 6% from that of the last corresponding period, translating into HK$36,595,000 (2016: HK$33,685,000) which accounted for 67% (2016: 66%) of the total revenue of the Group in the period. The fair value of these investment properties appreciated in the sum of RMB26,000,000 (2016: RMB36,000,000), translating into HK$30,662,000 (2016: HK$41,256,000). Thereby, this segment results recorded a total profit of HK$62,213,000 (2016: HK$69,818,000) in the period, denoting a moderate drop of 11% as compared with that of the last corresponding period. During the period under review, Shenzhen Zhen Wah Harbour Enterprises Ltd. ( Zhen Wah, a joint venture in which the Group holds 49%), which holds a piece of land located in Tung Kok Tau, Nanshan District, Shenzhen (the Land ), continued its proceedings of compulsory liquidation which commenced in July 2016 under supervision of the court of the People s Republic of China (the PRC ) and management of a liquidation committee (the Liquidation Committee ) as nominated by the PRC court. In the period, the Group continued to closely monitor the liquidation proceedings of Zhen Wah with the assistance of its legal advisers. The claims lodged with the Liquidation Committee by the Group for creditor s debts against Zhen Wah were under review by the Liquidation Committee and the PRC court. Meanwhile, the Group kept on working actively with the Liquidation Committee, relevant official authorities and Chinese joint venture partner regarding the liquidation and the proposal for re-zoning, compensation for demolition, relocation and increase of gross developable area of the Land (the Proposal ). The Proposal is subject to official valuation, assessment and approval in accordance with the relevant laws and regulations. Based on PRC legal advice received by the Group, the Land will eventually be sold by way of public auction or disposed of by other applicable means in accordance with PRC laws, and any surplus (after settlement of all relevant liabilities) will be distributed to the joint venture partners in accordance with their equity contributions. As announced on 7 February 2018, due to complexity of issues involved in the liquidation of Zhen Wah including the aforesaid matters, the PRC court accepted the application lodged by the Liquidation Committee to further extend the period of compulsory liquidation of Zhen Wah for six months up to July 2018.

9 7 Management Statement (Continued) BUSINESS REVIEW (Continued) As reported on 29 September 2017, based on the PRC legal advice and to further strive for the best interests of the Group, the Group lodged an application for international arbitration (the Arbitration ) with South China International Economic and Trade Arbitration Commission (the Arbitration Commission ) in June 2017 to determine the precise entitlement of the Group regarding rent, income and profit generated from the Land, pursuant to a shareholders agreement entered into between the Group and the Chinese joint venture partner on 20 December 1996 in relation to Zhen Wah. The arbitral application was accepted by the Arbitration Commission in August The Arbitration has been suspended for conciliation up to the end of July 2018 with the consent of the Group and the Chinese joint venture partner. If both shareholders of Zhen Wah fail to compromise, the Arbitration will resume. Irrespective of the result of the Arbitration, Zhen Wah will be wound up in the liquidation process in due course. FINANCIAL REVIEW Capital Structure The financial position of the Group remains sound and liquid, and its financing and treasury policies are managed and controlled at the corporate level and prudent manner during the period. The main objective is to utilise the group funding efficiently and to manage the financial risks effectively. At 31 December 2017, the equity attributable to its owners amounted to HK$2,127,702,000 (30 June 2017: HK$1,978,078,000) with net asset value per share of HK$9.45 (30 June 2017: HK$8.79). Total unsecured and secured bank borrowings of the Group amounted to about HK$139,405,000 (30 June 2017: HK$143,290,000), which were in HK$ and repayable within three years on floating rate basis. As at 31 December 2017, the gearing ratio of the Group was 7% (30 June 2017: 7%) based on the total debt of the Group to its equity attributable to owners of the Company. The exposure to foreign currency fluctuations affected the Group in the period under review was mainly due to the fluctuation of RMB appreciated against HK$, resulting in the net exchange gain of HK$5,029,000 (six months ended 31 December 2016: net exchange loss of HK$6,409,000) and exchange difference on translation functional currency of RMB to presentation currency of HK$, amounting to other comprehensive income of HK$78,876,000 (six months ended 31 December 2016: other comprehensive expense of HK$88,542,000). No financial instruments were used for hedging purpose in the period. And the Group will continue to closely monitor the impact of fluctuation of RMB in order to minimise its adverse impact.

10 8 Management Statement (Continued) FINANCIAL REVIEW (Continued) Financial Resources and Liquidity In the period under review, there was sufficient cashflow as generated by rental revenue of investment properties in Shanghai and Beijing. As at 31 December 2017, the bank balance and deposits and cash of the Group stood at HK$264,656,000 (30 June 2017: HK$258,278,000) in aggregate and denominated primarily in RMB. With sufficient cashflow, the Group maintained an un-utilised credit facilities of HK$16,000,000 as working capital at floating interest rate as at 31 December 2017 (30 June 2017: HK$16,000,000). No significant capital expenditure commitments and authorisations were made in the period. Pledge of Assets and Contingent Liabilities As at 31 December 2017, the Group pledged its properties with a total carrying value of HK$937,900,000 (30 June 2017: HK$882,569,000), an assignment of rental and sale proceeds from such properties and a charge over shares in respect of a wholly-owned subsidiary of the Group to financial institutions as security against general banking facilities granted to the Group, and also pledged certain of its bank deposits in the sum of HK$14,986,000 (30 June 2017: HK$4,610,000) to banks to secure banking facilities and home loans granted to the home buyers of property project of the Group. As at the end of the reporting period, the Group has given guarantees in respect of settlement of home loans provided by banks to the home buyers of a property project in Beijing. As at 31 December 2017, the Group had given guarantees in respect of such home loans of HK$2,140,000 (30 June 2017: HK$2,959,000). The Directors of the Company consider that the fair values of these financial guarantee contracts at their initial recognition and at the end of the reporting period are insignificant on the basis of the low loan ratio.

11 9 Management Statement (Continued) PROSPECTS With the solid economic growth of China and strengthening RMB in the period under review, it is anticipated that the China government will continue to adopt expedient fiscal and monetary policy to procure economic growth in the long term, to moderate exchange rate of RMB and local investments, associated with focus on development of high-end service industry and domestic consumption that will continue to bolster leasing demand of office and retail sectors. In Beijing, strong growth of online retail sales and increasing supply of retail space will continue to put pressure on demand and rental of retail spaces. Nevertheless, it is expected that the resilient middle-class consumption will sustain mid-range and massmarket retailers, which are integrating online and offline retail channels. In order to maintain high occupancy rate and constant revenue to the Group, the Group will endeavor to proactively enhance leasing and marketing strategies, emphasising an experience-focused brand mix and outlet stores so as to attract the attention of more consumers. In Shanghai, it is expected that take-up of office market will remain stable in Pudong as financial hub and driven by demand from local financial and professional enterprises as well as co-working companies. But the rental growth will face downward pressure amid considerable volumes of new completions and unabsorbed vacancies. To maintain high occupancy rate and steady recurring revenue, the Group will continue to adopt competitive rental strategies. The Group will continue to act proactively for safeguarding the best interests of the Company in Zhen Wah. It will continue to adopt the best available measures and take expedient action with a view to protecting the Company s interests in the context of the compulsory liquidation of Zhen Wah. However, the issues involved in liquidation of Zhen Wah are complex and sophisticated, involving not only the PRC court but also various governmental authorities. There is no assurance that the liquidation may not be subject to significant delay, oppositions, obstructions and further dispute or litigation with respect to the matters of Zhen Wah and/or its assets.

12 10 Management Statement (Continued) CLOSURE OF REGISTER OF MEMBERS The register of members of the Company will be closed from Tuesday, 10 April 2018 to Friday, 13 April 2018 (both days inclusive), during which period no transfer of shares of the Company will be registered. In order to qualify for the interim dividend, all properly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company s branch share registrar in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong for registration not later than 4:30 p.m. on Monday, 9 April DIRECTORS INTERESTS AND SHORT POSITIONS IN SHARES As at 31 December 2017, the interests and short positions held by the Directors or the chief executive(s) of the Company or any of their associates in the shares of the Company (the Shares ), shares of any of its associated corporations and underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the SFO )) as recorded in the register required to be kept by the Company under Section 352 of the SFO, or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the Stock Exchange ) pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the Listing Rules ) were as follows: Name of Director Personal interests in number of issued ordinary Shares of the Company (long position) Personal interests in underlying Shares pursuant to share options (long position) Aggregate interests Total interests as approximate percentage of issued share capital (note 1) (note 2) Mr. TAN Harry Chua 636,000 1,500,000 2,136, % Dr. CHAN Wing Kit, Frank 1,650,000 1,650, % Mr. TAN Lucio Jr. Khao 1,500,000 1,500, % Mr. PASCUAL Ramon Sy 80,000 1,500,000 1,580, % Mr. CHIU Siu Hung, Allan 1,000,000 1,000, % Mr. CHONG Kim Chan, Kenneth 1,000,000 1,000, % Dr. SY Robin Chua 1,000,000 1,000, % Dr. FOK Kam Chu, John 650, , % Mr. GO Patrick Lim 1,000,000 1,000, %

13 11 Management Statement (Continued) DIRECTORS INTERESTS AND SHORT POSITIONS IN SHARES (Continued) Notes: 1. The Directors interests in the underlying Shares are through share options granted by the Company on 25 October 2011 under the 2001 share option scheme and 10 November 2015 under the 2011 share option scheme respectively, details of which are set out in note 16 to the condensed consolidated financial statements in this interim report. 2. The calculation is derived from the aggregate interests as a percentage of the total number of issued Shares of the Company (i.e. 225,066,181 Shares) as at 31 December Save as disclosed above, as at 31 December 2017, none of the Directors, the chief executive(s) of the Company or any of their associates had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) recorded in the register required to be kept by the Company under Section 352 of the SFO, or which were notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules. Save as disclosed above, none of the Directors, the chief executive(s) of the Company or any of their associates had been granted or exercised any rights to subscribe for any equity or debt securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) during the six months ended 31 December MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted a code of conduct regarding securities transactions by Directors as set out in Appendix 10 to the Listing Rules. Having made specific enquiry of the Directors of the Company, all the Directors confirmed that they had complied with the required standards of dealings as set out therein during the six months ended 31 December 2017.

14 12 Management Statement (Continued) DISCLOSURE OF INFORMATION ON DIRECTORS By virtue of rule 13.51B(1) of the Listing Rules, the updated information on Director(s) is that Mr. CHUA Joseph Tan, executive Director, ceased to serve the board of directors of Philippine National Bank, securities of which are listed on The Philippine Stock Exchange, Inc. SUBSTANTIAL SHAREHOLDERS INTERESTS AND SHORT POSITIONS IN SHARES As at 31 December 2017, so far as is known to any Director or chief executive(s) of the Company, persons (other than the Directors or the chief executive(s) of the Company) who had interests or short positions in the Shares or underlying Shares of the Company as recorded in the register required to be kept by the Company under Section 336 of the SFO were as follows: Name Capacity Number of issued ordinary Shares and underlying Shares pursuant to share options (long position) Total interests (long position) Total interests as approximate percentage of issued share capital (note 5) Dr. TAN Lucio C. Founder of a private 89,321,279 93,701, % discretionary trust Beneficial owner (note 1) 2,190,000 Family interests (note 1) 2,190,000 Mrs. TAN Carmen K. Family interests (note 2) 91,511,279 93,701, % Beneficial owner (note 2) 2,190,000 Dynamic Development Beneficial owner 89,321,279 89,321, % Corporation Carnation Investments Inc. Trustee of a private 89,321,279 89,321, % discretionary trust (note 3) Mr. CHUA Domingo Corporate interests (note 4) 89,321,279 95,121, % Beneficial owner (note 4) 5,800,000

15 13 Management Statement (Continued) SUBSTANTIAL SHAREHOLDERS INTERESTS AND SHORT POSITIONS IN SHARES (Continued) Notes: 1. Dr. TAN Lucio C. beneficially held 2,190,000 underlying Shares as derivative interests. Dr. TAN, being the spouse of Mrs. TAN Carmen K. who was interested in 2,190,000 underlying Shares as derivative interests, was deemed or taken to be interested in such Shares as family interests in which Mrs. TAN Carmen K. was interested under the SFO. 2. Mrs. TAN Carmen K. beneficially held 2,190,000 underlying Shares as derivative interests. Mrs. TAN, being the spouse of Dr. TAN Lucio C. who was interested in 89,321,279 Shares of the Company as a founder of a private discretionary trust and 2,190,000 underlying Shares as derivative interests, was deemed or taken to be interested in such Shares as family interests in which Dr. TAN Lucio C. was interested under the SFO. 3. Carnation Investments Inc. was taken to be interested in 89,321,279 Shares in the Company as the entire issued share capital of Dynamic Development Corporation was held by Carnation Investments Inc. as trustee for a private discretionary trust. 4. The corporate interests of Mr. CHUA Domingo were held through Dynamic Development Corporation. Dynamic Development Corporation is wholly-owned by Carnation Investments Inc. Mr. CHUA Domingo is the sole shareholder and director of Carnation Investments Inc. Mr. CHUA Domingo beneficially held 4,000,000 Shares and 1,800,000 underlying Shares as derivative interests. 5. The calculation is derived from the aggregate interests as a percentage of the total number of issued Shares of the Company (i.e. 225,066,181 Shares) as at 31 December The references to 89,321,279 Shares in the Company in which Dr. TAN Lucio C., Mrs. TAN Carmen K., Mr. CHUA Domingo, Dynamic Development Corporation and Carnation Investments Inc. were interested or taken to be interested relate to the same block of Shares. Save as disclosed above, as at 31 December 2017, no other person (other than the Directors and the chief executive(s) of the Company) had any interests or short positions in the Shares and underlying Shares recorded in the register required to be kept by the Company under Section 336 of the SFO. EMPLOYEES AND EMOLUMENT POLICY At 31 December 2017, the Group had about 50 employees (including Directors) in Hong Kong and the mainland China at prevailing market remuneration with employee benefits such as medical insurance, provident fund schemes and share option schemes.

16 14 Management Statement (Continued) EMPLOYEES AND EMOLUMENT POLICY (Continued) Both the emoluments of the respective Directors of the Company and the emolument policy of the employees of the Group are recommended by the remuneration committee of the Company. They are on the basis of the respective merits, responsibilities and duties, performance, qualifications and competence, taking into account of comparable market level, operating results of the Group, corporate goals and objectives of the Board of Directors and relevant legal requirements, provisions, guidelines and recommendations of regulatory bodies. The Company has adopted share option schemes as incentive to Directors and eligible employees, details of the schemes are set out in note 16 to the condensed consolidated financial statements. DISCLOSURE UNDER RULE OF THE LISTING RULES Details of advances given to an affiliated company as at 31 December 2017, which exceeded 8% under the assets ratio as defined under rule of the Listing Rules are as follows: Affiliated company Percentage of equity held by the Group Amount of advances at 31 December 2017 HK$ 000 (Unaudited) Shenzhen Zhen Wah Harbour Enterprises Ltd. (Note) 49% 233,467 Note: The operation period of Zhen Wah expired on 16 January Thereafter, Zhen Wah ceased its operation and is now in the process of liquidation. The advances to Zhen Wah by the Group have been accounted for as amount due from a joint venture, details of which are disclosed in note 11 to the condensed consolidated financial statements. The amount of advances are unsecured and to be repayable after the next twelve months from the end of the reporting period.

17 15 Management Statement (Continued) DISCLOSURE UNDER RULE OF THE LISTING RULES (Continued) Pursuant to the continuing disclosure requirements under rule of the Listing Rules, the combined statement of financial position of the above affiliated company, Zhen Wah and the attributable interests of the Group in Zhen Wah as at 31 December 2017 are disclosed as follows: Combined statement of financial position HK$ 000 (Unaudited) Group s attributable interests HK$ 000 (Unaudited) Non-current assets 227, ,594 Current assets 41,806 20,485 Current liabilities (11,503) (5,636) Non-current liabilities (233,467) (114,399) Net assets 24,579 12,044 CORPORATE GOVERNANCE Throughout the six months ended 31 December 2017, the Company has applied the principles and has complied with the code provisions as set out in the Corporate Governance Code stipulated in Appendix 14 to the Listing Rules. PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES During the period, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities. AUDIT COMMITTEE The audit committee of the Company has reviewed the accounting practices and principles adopted by the Group and discussed with the management as to auditing, risk management and internal control, corporate governance and financial reporting matters including the review of this unaudited interim report for the six months ended 31 December Hong Kong, 27 February 2018 By Order of the Board CHAN Wing Kit, Frank Director and Chief Executive Officer

18 16 REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF DYNAMIC HOLDINGS LIMITED (incorporated in the Bermuda with limited liability) INTRODUCTION We have reviewed the condensed consolidated financial statements of Dynamic Holdings Limited (the Company ) and its subsidiaries (collectively referred to as the Group ) set out on pages 18 to 36, which comprise the condensed consolidated statement of financial position as of 31 December 2017 and the related condensed consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 Interim Financial Reporting ( HKAS 34 ) issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. SCOPE OF REVIEW We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Hong Kong Institute of Certified Public Accountants. A review of these condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

19 17 Report on Review of Condensed Consolidated Financial Statements (Continued) CONCLUSION Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34. Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 27 February 2018

20 18 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the six months ended 31 December 2017 Six months ended 31 December Notes HK$ 000 HK$ 000 (Unaudited) (Unaudited) Revenue 3 54,536 51,121 Direct costs (12,189) (10,752) Gross profit 42,347 40,369 Other income, gains and losses 4 14,583 2,898 Increase in fair value of investment properties 10 47,408 42,974 Administrative expenses (14,323) (12,766) Selling expenses (487) (574) Finance costs 5 (1,562) (1,992) Share of loss of a joint venture (4,852) (5,123) Profit before taxation 6 83,114 65,786 Taxation 7 (2,900) (7,111) Profit for the period 80,214 58,675 Other comprehensive income (expense) Item that will not be reclassified subsequently to profit or loss: Exchange differences on translation to presentation currency 78,876 (88,542) Total comprehensive income (expense) for the period 159,090 (29,867)

21 19 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Continued) For the six months ended 31 December 2017 Six months ended 31 December Note HK$ 000 HK$ 000 (Unaudited) (Unaudited) Profit for the period attributable to: Owners of the Company 78,876 58,003 Non-controlling interests 1, ,214 58,675 Total comprehensive income (expense) attributable to: Owners of the Company 156,376 (28,986) Non-controlling interests 2,714 (881) 159,090 (29,867) Earnings per share (Hong Kong cents) 9 Basic Diluted

22 20 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 31 December 2017 At 31 December 2017 At 30 June 2017 Notes HK$ 000 HK$ 000 (Unaudited) (Audited) Non-current Assets Property, plant and equipment 2,209 2,214 Investment properties 10 2,115,060 1,990,736 Interest in a joint venture 11 86,008 86,974 Amount due from a joint venture , ,549 Other asset 1,435 1,382 2,438,179 2,299,855 Current Assets Properties held for sale 16,347 15,675 Loan receivables 12 Trade and other receivables 13 50,785 35,438 Amount due from a non-controlling shareholder Pledged bank deposits 14,986 4,610 Fixed bank deposits 135, ,035 Bank balances and cash 128, , , ,882 Current Liabilities Trade and other payables 14 65,804 62,269 Tax payable 95,420 93,744 Dividend payable 8 6,752 Bank loans due within one year 7,766 7, , ,783 Net Current Assets 171, ,099 Total Assets less Current Liabilities 2,610,126 2,450,954

23 21 Condensed Consolidated Statement of Financial Position (Continued) At 31 December 2017 At 31 December 2017 At 30 June 2017 Note HK$ 000 HK$ 000 (Unaudited) (Audited) Capital and Reserves Share capital , ,066 Reserves 1,902,636 1,753,012 Equity attributable to owners of the Company 2,127,702 1,978,078 Non-controlling interests 37,445 34,731 Total Equity 2,165,147 2,012,809 Non-current Liabilities Bank loans due after one year 131, ,520 Deferred tax liabilities 313, , , ,145 2,610,126 2,450,954

24 22 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 31 December 2017 Attributable to owners of the Company Capital redemption reserve Share option reserve Noncontrolling interests Share Share Special Translation Other Statutory Retained capital premium reserve reserve reserve reserve profits Sub-total Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (Note a) (Note b) (Note c) At 1 July 2017 (audited) 225, ,619 55,018 1, ,537 6,343 92,451 9, ,958 1,978,078 34,731 2,012,809 Profit for the period 78,876 78,876 1,338 80,214 Exchange differences arising on translation 77,500 77,500 1,376 78,876 Total comprehensive income for the year 77,500 78, ,376 2, ,090 Transfer 85 (85) Cash dividends (note 8) (6,752) (6,752) (6,752) At 31 December 2017 (unaudited) 225, ,619 55,018 1, ,037 6,343 92,451 9,527 1,025,997 2,127,702 37,445 2,165,147 At 1 July 2016 (audited) 224, ,292 55,018 1, ,750 6,586 92,451 9, ,744 1,902,346 34,154 1,936,500 Profit for the period 58,003 58, ,675 Exchange differences arising on translation (86,989) (86,989) (1,553) (88,542) Total comprehensive (expense) income for the year (86,989) 58,003 (28,986) (881) (29,867) Issue of shares upon exercise of share options (224) Cash dividends (note 8) (6,750) (6,750) (6,750) At 31 December 2016 (unaudited) 225, ,594 55,018 1, ,761 6,362 92,451 9, ,997 1,867,285 33,273 1,900,558 Notes: (a) (b) (c) The special reserve of the Group arose from the difference between the aggregate amount of the then share capital, share premium, general reserve and retained profits of the subsidiaries acquired, and the nominal amount of the Company s shares issued for the acquisition in relation to a previous group reorganisation. The other reserve of the Group represents deemed contributions from equity holders of the Company which arose from the difference between the fair value of consideration paid and payable and the net fair value of the identifiable assets, liabilities and contingent liabilities acquired through acquisition of the subsidiaries during the year ended 30 June The statutory reserve transferred from retained profits are required by relevant laws and regulations of the People s Republic of China ( PRC ) applicable to the Company s subsidiary in the PRC.

25 23 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 31 December 2017 Six months ended 31 December HK$ 000 HK$ 000 (Unaudited) (Unaudited) Net cash from operating activities 10,566 3,911 Net cash (used in) from investing activities Interest received 1,495 3,834 (Placement) withdrawal of fixed bank deposits (728) 8,071 (Placement) withdrawal of pledged bank deposits (10,199) 1,714 Purchase of property, plant and equipment (85) (800) (9,517) 12,819 Net cash used in financing activities Issue of shares upon exercise of share options 675 Repayment of bank loans (4,000) (4,000) Interest paid (1,562) (1,992) (5,562) (5,317) Net (decrease) increase in cash and cash equivalents (4,513) 11,413 Cash and cash equivalents at beginning of the period 128,243 83,598 Effect of foreign exchange rate changes 4,984 (3,923) Cash and cash equivalents at end of the period, represented by bank balances and cash 128,714 91,088

26 24 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 31 December BASIS OF PREPARATION The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). 2. PRINCIPAL ACCOUNTING POLICIES The condensed consolidated financial statements have been prepared on the historical cost basis, except for investment properties, that are measured at their fair values. The accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 31 December 2017 are the same as those followed in the preparation of the Group s annual consolidated financial statements for the year ended 30 June REVENUE AND SEGMENT INFORMATION Information reported to the board of Directors (the Board ) of the Company, being the chief operating decision maker, for the purpose of resource allocation and assessment of performance focused on the location of the properties for property rental and property sales. The property rental segment includes property leasing operation in the People s Republic of China (the PRC ). The Group s investment properties portfolio, which mainly consists of offices, shopping mall and carparks, are located in Shanghai and Beijing. The property sales segment includes sales of the Group s trading properties in Beijing. These divisions, property rental and property sales analysed based on distinct geographical locations, are the basis on which the Group reports its segment information under Hong Kong Financial Reporting Standard 8 Operating Segments.

27 25 Notes to the Condensed Consolidated Financial Statements (Continued) For the six months ended 31 December REVENUE AND SEGMENT INFORMATION (Continued) The following is an analysis of the Group s revenue and results by reportable and operating segment for the period: Property rental Property sales Consolidated Beijing Shanghai Beijing Six months ended 31 December (Unaudited) HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 SEGMENT REVENUE REVENUE External sales 17,941 17,436 36,595 33,685 54,536 51,121 SEGMENT RESULT 27,119 12,680 62,213 69,818 (95) (99) 89,237 82,399 Unallocated other income 13,522 2,399 Unallocated corporate expenses (13,231) (11,897) Finance costs (1,562) (1,992) Share of loss of a joint venture (4,852) (5,123) Profit before taxation 83,114 65,786 The accounting policies of the operating segments are the same as the Group s accounting policies. Segment result represents the profit (loss) from each segment without the allocation of central administration costs, exchange gain (loss), bank interest income, imputed interest incomes on amount due from a joint venture and other receivables, finance costs and share of loss of a joint venture. This is the measure reported to the Board for the purposes of resources allocation and performance assessment.

28 26 Notes to the Condensed Consolidated Financial Statements (Continued) For the six months ended 31 December OTHER INCOME, GAINS AND LOSSES Six months ended 31 December HK$ 000 HK$ 000 (Unaudited) (Unaudited) Included in other income, gain and losses are: Bank interest income 1,552 1,913 Exchange gain (loss), net 5,029 (6,409) Imputed interest income on amount due from a joint venture 6,711 6,895 Imputed interest income on other receivables 1 5. FINANCE COSTS Six months ended 31 December HK$ 000 HK$ 000 (Unaudited) (Unaudited) Interest on bank borrowings 1,562 1, PROFIT BEFORE TAXATION Six months ended 31 December HK$ 000 HK$ 000 (Unaudited) (Unaudited) Profit before taxation has been arrived at after charging: Depreciation of property, plant and equipment

29 27 Notes to the Condensed Consolidated Financial Statements (Continued) For the six months ended 31 December TAXATION Six months ended 31 December HK$ 000 HK$ 000 (Unaudited) (Unaudited) The tax charge comprises: Current tax in the PRC (other than Hong Kong) Current period 3,761 3,509 Deferred tax (credit) charge (861) 3,602 2,900 7,111 No provision for Hong Kong Profits Tax has been made in the condensed consolidated financial statements as the Group has no assessable profit for both periods. Under the Law of the PRC on Enterprise Income Tax (the EIT Law ) and Implementation Regulation of the EIT Law, the tax rate of the Group s PRC entity is 25%. Certain subsidiaries of the Company incorporated in Hong Kong and the British Virgin Islands are subject to withholding tax ranging from 10% to 25% on their taxable rental income, management fee income and interest income in the PRC. 8. DIVIDENDS Six months ended 31 December HK$ 000 HK$ 000 (Unaudited) (Unaudited) Final dividend payable in respect of year ended 30 June 2017 of 3 Hong Kong cents (2016: 3 Hong Kong cents) per share 6,752 6,750 Subsequent to the end of the current interim period, the Directors of the Company have declared that an interim dividend of 2.5 Hong Kong cents (six months ended 31 December 2016: 2.5 Hong Kong cents) will be paid to the owners of the Company whose names appear on the register of members of the Company on 13 April 2018.

30 28 Notes to the Condensed Consolidated Financial Statements (Continued) For the six months ended 31 December EARNINGS PER SHARE The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data: Six months ended 31 December HK$ 000 HK$ 000 (Unaudited) (Unaudited) Earnings Earnings for the purposes of basic and diluted earnings per share (profit for the period attributable to owners of the Company) 78,876 58,003 Six months ended 31 December (Unaudited) (Unaudited) Number of shares Weighted average number of ordinary shares for the purpose of basic earnings per share 225,066, ,811,901 Effect of dilutive potential ordinary shares on share options 12,998,662 11,448,153 Weighted average number of ordinary shares for the purpose of diluted earnings per share 238,064, ,260, INVESTMENT PROPERTIES HK$ 000 FAIR VALUE At 1 July 2017 (audited) 1,990,736 Exchange realignment 76,916 Increase in fair value of investment properties 47,408 At 31 December 2017 (unaudited) 2,115,060

31 29 Notes to the Condensed Consolidated Financial Statements (Continued) For the six months ended 31 December INVESTMENT PROPERTIES (Continued) The fair value of the Group s investment properties as at 30 June 2017 and 31 December 2017 has been arrived at on the basis of valuations carried out on those dates by Savills Valuation and Professional Services Limited, an independent firm of qualified professional valuers not connected with the Group with appropriate qualification and recent experience in the valuation of similar properties in the relevant locations. The valuation was arrived at by reference to market evidence of transaction prices for similar properties in the same location and conditions or where appropriate by considering the capitalising income to be derived from the existing tenancies and the reversionary potential of the properties. The revaluation gave rise to a net gain arising from increase in fair value of HK$47,408,000 (six months ended 31 December 2016: HK$42,974,000) which has been recognised in profit or loss. 11. INTEREST IN A JOINT VENTURE/AMOUNT DUE FROM A JOINT VENTURE At 31 December 2017 HK$ 000 (Unaudited) At 30 June 2017 HK$ 000 (Audited) Cost of investment, unlisted 165, ,265 Share of post-acquisition losses and reserves (79,587) (75,291) 86,008 86,974 Amount due from a joint venture 233, ,549 Note: Shenzhen Zhen Wah Harbour Enterprises Ltd. ( Zhen Wah ) was a sino-foreign equity joint venture company and indirectly held by the Company. The Group was able to exercise 50% voting power in the joint venture, which was determined by the proportion of the Group s representatives in the board of directors of Zhen Wah. The Group had lodged petitions for international arbitrations in respect of the dispute with the Chinese joint venture partner as to the percentages of equity interest held in Zhen Wah in prior years. Two arbitral proceedings were heard and two arbitral awards were made by China International Economic and Trade Arbitration Commission in 2008 and Before the arbitrations, the Group injected RMB42,840,000 as investment cost to Zhen Wah, representing 80% of equity interests in Zhen Wah. Pursuant to the arbitral award made in 2008, the registered capital of Zhen Wah was confirmed to be RMB21,000,000, of which RMB10,290,000 and RMB10,710,000 were contributed by the Group and the Chinese joint venture partner, respectively, and that the equity interests of Zhen Wah were held by the Group and the Chinese joint venture partner as to 49% and 51% respectively. The additional capital contribution of RMB32,550,000 by the Group was considered as advances to Zhen Wah by the Group.

32 30 Notes to the Condensed Consolidated Financial Statements (Continued) For the six months ended 31 December INTEREST IN A JOINT VENTURE/AMOUNT DUE FROM A JOINT VENTURE (Continued) Note: (Continued) Also, the arbitral award made in 2010 supported the distribution of profit arising from relevant income generated from a piece of land held by Zhen Wah located in Tung Kok Tau, Shenzhen, the PRC before re-development entitled by the Group should be 80%. The assets and liabilities of Zhen Wah were deconsolidated and the Group s share of net assets and results in Zhen Wah had been accounted for as a joint venture under the equity method based on the Group s 49% equity interest in Zhen Wah since the year ended 30 June The distribution of profit arising from relevant income was accounted for under the equity method based on the Group s 49% equity interest in Zhen Wah. The additional share of 31% up to 31 December 2017 which has not been recognised by the Group amounted to HK$10,368,000 (30 June 2017: HK$10,368,000), as the Directors of the Company consider the result of the arbitration is subject to the agreement of the Chinese joint venture partner. The operation period of Zhen Wah expired on 16 January Both joint venture partners of Zhen Wah determined not to extend its operation period and an application was lodged to liquidate Zhen Wah in prior year. The PRC court accepted the application for liquidation of Zhen Wah and appointed a law firm in the PRC as the liquidation committee of Zhen Wah in prior year. Based on the PRC laws and regulations and the related interpretations by an external PRC legal counsel engaged by the Group, after the expiry of the operation period and even under liquidation process, the legal identity of Zhen Wah still exists and the net assets of Zhen Wah will be distributed to the joint venture partners based on their equity contributions after the completion of the liquidation. The Directors of the Company expect that the liquidation process is not expected to complete within one year. Accordingly, the Directors of the Company continue to account for Zhen Wah as a joint venture of the Group using the equity method of accounting in these condensed consolidated financial statements. The amount due from a joint venture is unsecured and to be repayable after the next twelve months from the end of the reporting period. The amount is carried at amortised cost at an effective interest rate of 6% (30 June 2017: 6%) per annum. The Directors of the Company have assessed the recoverability of interest in a joint venture and amount due from a joint venture amounting to HK$86,008,000 and HK$233,467,000, respectively as at 31 December Based on the latest financial information and fair value of net assets of Zhen Wah, the Directors of the Company have concluded that the amounts will be fully recoverable. Particulars of the joint venture as at 31 December 2017 and 30 June 2017 are as follows: Name of joint venture Place of establishment The Group s equity interest Principal activity Shenzhen Zhen Wah Harbour Enterprises Ltd. PRC 49% Operation ceased